The average mortgage deposit for first-time buyers in London will soar beyond £100,000 by 2020, a major report warns today.

That will make home ownership an “impossible dream” for all but the wealthiest young Londoners as foreign investors and City professionals snap up most new flats and houses, it says. The grim prediction comes as an Evening Standard analysis of Greater London Authority figures found levels of home ownership in freefall among the under-35s.

The report, from independent analysts Oxford Economics, predicts that property prices will continue to rise in the capital over the next seven years. It forecasts that buyers looking for their first toe-hold on the housing ladder will need to spend £489,214 on average, compared with £333,629 last year.

With first-time London deposits averaging about 25 per cent, that requires up-front cash of £111,594 — a sum that could have bought the average home in the capital outright as recently as 1997.

Michelle Smith, London lead manager at the National Housing Federation which commissioned the research, said: “Where are Londoners supposed to find the money for the safe, secure home that so many of us aspire to?”

The findings come before a major Evening Standard public debate on London’s housing crisis in March, with a line-up of speakers including Boris Johnson’s top housing adviser Richard Blakeway, former Mayor Ken Livingstone and developer Rob Perrins of Berkeley Group.

Almost twice as many Londoners in the 25 to 34 age group now pay rent to a private landlord as those who own the roof over their heads, according to previously unpublished GLA data — and the gap is rapidly rising.

Just 202,000 Londoners aged 25 to 34 are owner-occupiers, compared with 380,000 in private rented accommodation and 110,000 social renters.

It is the first time tenure has been broken down by age group, so there are no prior comparisons. But property experts said ownership is in steep decline in the capital among twenty- and thirty-something age groups.

In some inner London boroughs property ownership with a mortgage is fast disappearing altogether as young workers are outbid by cash buyers looking to let out the properties. In Camden only 15.1 per cent of households now own the roof over their heads with a mortgage, according to latest Census figures, while in Hackney the total is just 15.3 per cent.

The figures are even lower in the wealthiest “bulls eye” boroughs of Kensington and Chelsea (12.8 per cent) and Westminster (12.9 per cent).

The explosion in the number of private landlords in London has pushed owner occupation into a minority in the capital for the first time since the early Eighties.

HomeOwners Alliance chief executive Paula Higgins said: “Young people are having their dreams of owning a home smashed. That aim is almost completely out of reach for anyone under 40 who doesn’t earn a telephone-number salary.

“London is turning once again into a city of renters — and it isn’t just bad for aspiring home owners but for the whole capital.

“It means we have a more transient, restless population without a stake in the future, and no long-term attachment to their communities.

“Young people who want to own their home and also those couples who want the space to start a family have to move out of London.”

Teacher of the year can't afford house

Nathan Kemp is one of Britain’s most inspirational young teachers. He was the 2012 Teacher of the Year — picking up his award from radio presenter Zoë Ball — and was described as “exceptionally gifted” for his work at Tollgate Primary School in Plaistow. He is exactly the kind of talented “key worker” that London needs to retain.

Yet Mr Kemp, 28, already an assistant head, despairs of ever being able to save the money he needs for a deposit on a home and fears that eventually he will have to leave the capital to put down permanent roots.

Mr Kemp lives with his girlfriend in a rented one-bedroom flat in Epping. He is a higher rate 40 per cent taxpayer, which means he earns at least £34,371, but still struggles to put much money aside after paying the £800 a month rent, upkeep for his car and repayments on about £12,000 of loan and credit card debt.

The Devon-born teacher says he wants to buy in Epping “in an ideal world” but cannot see how he can possibly raise the tens of thousands of pounds he would need to put down on even a small flat in the area, which cost about £225,000 to £240,000.

He said: “My job is a fundamental part of my life, the things that have happened here have been fantastic, that’s what’s keeping me in London. But I don’t know anyone I work with who is in a position to own.”